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Why Under Armour Stock Gained 10% in June

By Joe Tenebruso – Updated Jul 6, 2019 at 6:02PM

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The sports apparel company is solidifying its relationship with a key customer.

What happened

Shares of Under Armour (UAA 2.32%) (UA 2.19%) rose roughly 10% last month, according to data provided by S&P Global Market Intelligence, following positive comments by the CEO of its largest wholesale customer.

So what

During its first-quarter earnings call on May 29, Robert W. Baird & Co. analyst Peter Benedict asked Dick's Sporting Goods (DKS 5.58%) CEO Edward Stack for an update on Under Armour's efforts to improve its product offerings within the retailer's stores.

Stack said that he was very pleased with the progress that Under Armour has made. "Especially in our men's businesses, it's really quite good," he said. "So all in all, we're very pleased with what's going on with Under Armour and the direction forward."

A man in a business suit pointing his thumb up

Dick's Sporting Goods CEO Edward Stack likes what he sees from Under Armour. Image source: Getty Images.

Now what

Under Armour's relationship with Dick's has been rocky in recent years. The sporting goods retailer reduced the amount of shelf space allotted to Under Armour in 2018, when sales of the brand's products at its locations stagnated, after Under Armour began selling its apparel in rival retailer Kohl's stores. Dick's used that shelf space to launch its own athletic apparel brand. 

Although it's unlikely that Under Armour will regain the shelf space it lost in Dick's stores, Stack's comments suggest that its relationship with its most important customer is improving. That's vital for Under Amour's success, since -- even as it expands its direct-to-consumer business -- Dick's Sporting Goods is still likely to account for a significant portion of its sales for the foreseeable future.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Under Armour (A Shares) and Under Armour (C Shares). The Motley Fool has a disclosure policy.

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Stocks Mentioned

Under Armour, Inc. Stock Quote
Under Armour, Inc.
UAA
$7.93 (2.32%) $0.18
Under Armour, Inc. Stock Quote
Under Armour, Inc.
UA
$7.00 (2.19%) $0.15
Dick's Sporting Goods, Inc. Stock Quote
Dick's Sporting Goods, Inc.
DKS
$116.74 (5.58%) $6.17

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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